Misleading advertising in the yellow pages has cost two Christchurch based rental car companies a total of $9,000 in the Christchurch District Court.

In separate hearings, Cut Price Rentals and Leisure Rentals (trading as A1 Backpacker Rentals) have been fined $5,000 and $4,000 respectively for breaching the Fair Trading Act.

Cut Price Rentals claimed in its Yellow Pages advertisement that cars were available for as low as $25 per day, but the "special conditions" meant that the minimum hire period to achieve the low rate was 28 days.

Similarly, A1 Backpacker Rentals used the phrase "conditions apply" to promote cars from as cheap as $19 a day. On investigation, that price was only available in off peak months and the hire period was for a minimum of seven days.

Commerce Commission Director of Fair Trading Deborah Battell said the Commission had initiated investigations into the rental car industry as a result of a series of complaints. "We took a close look at trading practices in the industry and found that advertising vehicles from a certain price with linked special conditions was a significant problem. We entered into settlements with 7 companies and warned 10 others. Both A1 Backpacker Rentals and Cut Price Rentals were offered settlements but refused."

"The recent court judgements reinforce the Commission's concern with this type of advertising. It is by no means confined to rental cars, however. It is a widespread practice and needs to stop," Ms Battell said.

There are two clear messages from these prosecutions. First, "special conditions" must not significantly limit or change the main offer, and secondly, the initial representation in any advertisement has to be accurate and can not be corrected at point of sale.

"This type of advertising is not fair to consumers. Nor is it fair to traders who provide accurate information to consumers. Consumers are often enticed to call a trader on the basis of what seems like a good deal. They then find that they can't get the advertised deal because of the special conditions, but are offered an alternative deal at a higher price. If they take this alternative, the consumer could miss out on getting a better deal elsewhere," said Ms Battell.

"It is also particularly important to get the information right when advertising in publications like the Yellow Pages where advertisements are on display for 12 months or more. The advertisement has a much longer lifespan than the usual newspaper-type advertisement."

Media contact: Fair Trading Director Deborah Battell

Phone work (04) 498 0908, cellphone 025 208 0841

Senior Advisor Communications Jackie Maitland

Phone work (04) 498 0920, cellphone (025) 249 3407